Empowering People to Change the WorldFunding and Mentoring Entrepreneurs

DRAFT October 7, 2009

Launching and Financing Your Social Enterprise

February 2013

Agenda

• Background on Draper Richards Kaplan

• The Funding Landscape

• The Funding Process

• Things to Consider

• Q&A

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Background on Draper Richards Kaplan

• DRK is a Venture Philanthropy firm founded in 2002 by Jenny Shilling-Stein along with Venture Capital veterans Bill Draper and Robin Richards.

• DRK is an early-stage, high-touch funder of social innovation:“We invest in social entrepreneurs who change the world.”

• DRK operates like a venture capital firm:– Raises funds from limited partners (and spends down over 5-7 yrs)– Provides capital to early stage organizations ($100K/yr x 3years)– Provides strategic and operational support beyond the capital

• DRK has funded 49 organizations to date:– Issue-area agnostic– Geographically agnostic– Focused on early stage– Highly-selective (<2% acceptance)

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Background on Draper Richards Kaplan: Business Models in DRK Portfolio

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Tightest management /least speed Loosest management /greatest speed

Full management Franchise PartnershipCurriculum distribution

Network

• Organization fully manages operations at all sites

• Organization licenses management of operations as part of a single network

• Organization licenses other organizations to employ model as part of their own network

• Organization authorizes use of its model through distribution of curriculum to other organizations

• Organization grows through spread of ideas through loose network of individuals/ organizations

• Room to Read

• Design that Matters

• Education Pioneers

• Kiva

• The Mission Continues

• VisionSpring

• One Acre Fund

• Grassroot Soccer

• Living Goods

• Little Kids Rock

• Spark

• Genocide Intervention Network

Agenda

• Background on Draper Richards Kaplan

• The Funding Landscape

• The Funding Process

• Things to Consider

• Q&A

5

The Funding Landscape: Sources, Dynamics and Considerations

• Funding Sources– Individuals– Foundations– Corporations– Government Entities– Other Non-Profit Organizations– Earned Revenue– Note: Highly successful non-profits have a concentrated funding mix

• Funder Dynamics– Focus on issue area– Focus on target demographic– Focus on geography– Focus on stage of growth– Focus on earned revenue/sustainability

• Funder type considerations– Restricted vs. Unrestricted– Reporting requirements– High-touch / Low-touch / No-touch– Potential funding source(s) will influence legal structure

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Note: Bubble size indicates relative average total grant size to social ventureSource: Foundation Center Directory; Organization websites

Engagementlevel

Funding stage

“Draper Richards Kaplan provides high level of support to very early stage social ventures”

The Funding Landscape: Sampling Of Venture Philanthropy Firms

Agenda

• Background on Draper Richards Kaplan

• The Funding Landscape

• The Funding Process

• Things to Consider

• Q&A

8

The Funding Process: Practically Speaking…

• DRK timeline is 4-6 months

• DRK required documents:– Grant application– Resume– Theory of Change– Development Pipeline– Operating/Business Plan

• DRK steps along the way…– Reviewing the application– Interviewing: the social entrepreneur, management team, the

board, extended network, “Outside the tent” sector experts– Developing metrics and milestones for the grant

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The Funding Process: What DRK Looks For

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• Does the entrepreneur exhibit characteristics of exceptional leadership?

• Can the entrepreneur handle challenges?

• Manage people?

• Communicate effectively?

• Strategically assess opportunities?

• Recruit board members?

• Is the model scalable?

• Is the model replicable?

• Is there service demand and dollars available for this model in additional areas such as other fields, geographies, methods of service delivery (e.g. advocacy, media, etc)?

• Is there an ongoing revenue source to support this work?

• Is the entrepreneur’s idea important?

• Does the idea meet a pressing need?

• Does it fill a gap that is not already met?

• Is it uniquely suited to fill that gap?

• Will the impact reach beyond the direct program beneficiaries (e.g. family members, communities, future generations)?

Entrepreneurial leadership

1Scalablemodel

2 Sustainableimpact

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• Improved staff and board strength

• Catalytic budget growth

• Sustainable revenue

• Increased social impact

Facet of strong organization

Key questions

Measure of success

The Funding Process: Leadership

• Identify/articulate a definite need

• Visionary managers who can build an organization

• Focused on clear impact

• Pursue long-range growth/evolution possibilities

• Proven entrepreneurial qualities (i.e. magnet for resources)

• Have relevant issue expertise

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We evaluate leadership by assessing an individuals capability to solve a pressing social need.

The Funding Process: Scale

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• Ideas that can be implemented with reasonable money, feasible plans and team,

• Models that produce tangible results – Where’s the leverage (e.g. technology, volunteers)? What is it enhancing/replacing?

• Scaling strategy

– Impact: Where are you going next?

– Organization How are you building your organization?

– Revenue Model: How will you increase revenues to match organization expenses?

If a leader can build a strong organization from the beginning, the organization has a much better chance at scaled and sustainable impact.

The Funding Process: Impact

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• Does it directly address the need of the target population the organization seeks to serve?

• Will the program create systemic change?

• What are your specific impact results intended for the three year term of the grant and generally beyond?

• How are you measuring, monitoring, and evaluating your impact?

• How do your impact metrics link back to your theory of change?

We look for leveraged solutions that create lasting positive change. We look for game-changing ideas that create better opportunities and outcomes for the future.

Agenda

• Background on Draper Richards Kaplan

• The Funding Landscape

• The Funding Process

• Things to Consider

• Q&A

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Things to Consider

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• Identify real problems

• Talk to the people with those problems (as well as veterans in your field)

• Analyze the competitive landscape (i.e. don’t assume that your solution will work or is unique.

• Consider joining an existing org or being an intrapreneur – many paths to having an impact

• Develop a theory of change to layout inputs, short term and long term outcomes, and ultimate impact BEFORE you pilot... will make selling your program’s vision much easier!

• Develop a business model… not just a program model– Identify who would be willing to pay– Test your assumptions

• Do not feel constrained by current systems

Things to Consider

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• Know your funder before you walk in the door – do the research

• Balance refining the program model with developing organizational capacity

• Spend time building, informing, and leveraging your board (i.e. TTT / WWW)

• Maintain a learning orientation (don’t think that you have all the answers)

• Keep your own counsel

• Go do it – get away from the white board and do it– Don’t over analyze– Fail Faster: You’ll learn more/faster by doing, than thinking

Q&A

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Thank you! Tom Fry, Draper Richards Kaplan Foundation